Hospira 2004 Long-term Stock Incentive Plan Performance Based Nqso Terms - HOSPIRA INC - 5-1-2012 by HSP-Agreements


									                                                                                                                                 Exhibit 10.4
                         HOSPIRA 2004 LONG-TERM STOCK INCENTIVE PLAN
                                   PERFORMANCE BASED NQSO TERMS
        The Participant specified below has been granted this Option by Hospira, Inc. (the “Company”) under
the terms of the Hospira 2004 Long-Term Stock Incentive Plan (the “Plan”).  The Option shall be subject to the
following terms and conditions (the “Option Terms”):
        1.         Terms of Award .  The following words and phrases relating to the grant of the Option shall 

have the following meanings:
                 (a)        The “Participant” is F. Michael Ball.

                 (b)        The “Grant Date” is March 1, 2012. 

                 (c)        The number of “Covered Shares” shall be 140,000 shares of Stock.

                 (d)        The “Exercise Price” is $35.36 per share.

        Except where the context clearly implies to the contrary, any capitalized term in this award shall have the
meaning ascribed to that term under the Plan.
        2.         Non-Qualified Stock Option .  The Option is not intended to constitute an “incentive stock

option” as that term is used in Code section 422.
        3.         Performance Conditions and Date of Exercise .  Subject to the limitations of this Performance 

Based NQSO Terms and provided the Expiration Date has not occurred prior to such vesting date, the Covered
Shares shall vest as follows:
                          (i)      one-half of the Covered Shares subject to these Options (rounded up, if

                 necessary) may be purchased on any trading day after the average of the closing price of the
                 Stock over a period of any 30 consecutive trading days commencing on or after the Grant Date
                 equals or exceeds $42.26; and
                          (ii)     the remainder of the Covered Shares subject to these Options may be

                 purchased on any trading day after the average of the closing price of the Stock over a period of
                 any 30 consecutive trading days commencing on or after the Grant Date equals or exceeds $
                 (a)        Notwithstanding the foregoing provisions of this Section 3, the Option shall become fully 

        exercisable upon a Change in Control that occurs on or before the Date of Termination or in the event of
        the Participant’s involuntary termination by the Company without Cause or the Participant’s resignation
        with Good Reason.
                  (b)        The Option may be exercised (prior to or following the Date of Termination) only as to

         that portion of the Covered Shares which may be purchased in accordance with this Section 3, as of the 
         date of exercise.
                  (c)        The Covered Shares shall continue to become exercisable pursuant to this Section 3 

         until the Expiration Date (as defined in Section 4). 
                  (d)        Notwithstanding the foregoing provisions of this Section 3, in the event of termination of 

         employment for reasons other than death, Disability or Retirement, the Option may only be exercised on
         or after the Date of Termination only as to that portion of the Covered Shares for which it was
         exercisable immediately prior to the Date of Termination, or became exercisable on the Date of
         4.         Expiration .  The Option shall not be exercisable after the Company’s close of business on the

last business day that occurs prior to the Expiration Date.  The “Expiration Date” shall be the earliest to occur of:
                  (a)       the five-year anniversary of the Grant Date;

                  (b)        if the termination of employment occurs for reasons other than death, Disability,

         Retirement, involuntary termination without Cause or the Participant’s resignation with Good Reason, the
         three-month anniversary of the Date of Termination (as defined in Section 10); provided, however, that if 
         the Participant dies during such three month period following the Date of Termination, then the three-
         month anniversary of the date of death;
                  (c)        the date on which the Participant engages in conduct which constitutes Cause;

                  (d)        the date on which the Participant, at any time prior to the one-year anniversary of the

         Date of Termination, engages, directly or indirectly, for the benefit of the Participant or others, in any
         activity, employment or business which, in the sole opinion and discretion of the Committee, is
         competitive with the Company or any of its Subsidiaries;
                  (e)        as provided under Restricted Activity in Section 5; or 

                  (f)       as provided under Other Right to Correct Payments in Section 6. 

         5.         Restricted Activity .

                  (a)       The Participant shall not, while employed by the Company and for a period of one year

         following the termination of employment for any reason:
                           (i)         without the prior written consent of the Committee, directly or indirectly engage

                  or assist any person engaging in any Competitive Business (as defined in Section 10), individually, 
                  or as an officer, director,
                   employee, agent, consultant, owner, partner, lender, manager, member, principal, or in any other
                   capacity, or render any services to any entity that is engaged in any Competitive Business;
                   provided, however, that the Participant’s ownership of 1% of any class of equity security of any
                   entity engaged in any Competitive Business shall not be deemed a breach of this Section 5
                   (a) provided such securities are listed on a national securities exchange or quotation system or 
                   have been registered under Section 12(g) of the Securities Exchange Act of 1934, as amended; 
                             (ii)      directly or indirectly divert, take away, solicit, or assist others in soliciting any

                   current or prospective customer, supplier, independent contractor or service provider of the
                   Company or any affiliate or otherwise interfere with the relationship between the Company or any
                   affiliate and any current or prospective customer, service provider, supplier, independent
                   contractor or stockholder.
                   (b)         The Participant shall not, while employed by the Company and for a period of two

          years following the termination of employment for any reason: directly or indirectly induce any person to
          leave employment with the Company, or solicit for employment other than on behalf of the Company,
          offer employment to, or employ, any person who was an employee of the Company, in each case within
          six months of such inducement, solicitation, or offer.
                   (c)         If the Participant engages in any activity described in Section 5(a) or Section 5(b) above 

          without the written consent of the Committee, the Company, as determined by the Committee in its sole
          discretion, may (i) cancel and terminate all of the Participant’s unexercised, unexpired or unpaid Options
          (whether vested or unvested) under the Plan, and (ii) rescind any exercise, payment or delivery under any 
          Option occurring within 12 months prior to, or at any time following, the date of the Participant’s
          termination of employment for any reason.  Upon any such rescission, the Participant shall immediately 
          (A) pay to the Company the amount of any gain realized or payment received, and (B) forfeit to the 
          Company any Shares received as a result of the rescinded exercise, payment or delivery under any
          Options, in such manner and on such terms and conditions as the Committee shall require, and the
          Company shall be entitled, as permitted by applicable law, to deduct from any amounts the Company
          owes the Participant from time to time the amount of any such gain realized or payment received.  “Gain
          realized” shall be the excess of the Fair Market Value of the Shares on the date of exercise over the
          Exercise Price, multiplied by the number of Shares purchased.
          6.         Other Right to Correct Payments .  Subject to the Company’s Executive Compensation

Recovery Policy, and notwithstanding anything in the Option Terms to the contrary, if the Committee determines,
in its sole discretion, that the number of Covered Shares determined to be delivered under the Option Terms or
the value of such Options was based on the Company’s published financial statements that have been restated
at the Committee’s direction, the Company may, but in no case later than 60 months of such restatement:
                 (a)        cancel all unexercised, unexpired or unpaid Options (whether vested or unvested) under

         the Plan that were based upon the financial performance in the published financial statements that was
         subsequently restated;
                 (b)        rescind any exercise, payment or delivery under any Option that were based upon the

         financial performance in the published financial statements that was subsequently restated; and
                 (c)        if any amount has been realized from exercised Options that would have been lower had

         the financial results been properly reported, recover all or any gain realized by the Participant, as
         determined by the Committee in its sole discretion, under the Option Terms that resulted from the
         financial results that were subsequently restated, and the Participant agrees to repay and return any such
         gain realized to the Company.
         The Committee may, in its sole discretion, effect any such recovery by obtaining repayment directly from
the Participant, setting off the amount owed to the Company against any amount or award that would otherwise
be granted by the Company to the Participant, reducing any future compensation or benefit to the Participant or
any combination thereof.  “Gain realized” shall be as determined under Section 5(c). 
         7.        Method of Option Exercise .  Subject to the Option Terms and the Plan, the Option may be 

exercised in whole or in part by filing a written notice with the Secretary of the Company at its corporate
headquarters prior to the Company’s close of business on the last business day that occurs prior to the Expiration
Date.  Such notice shall specify the number of shares of Stock which the Participant elects to purchase, and shall 
be accompanied by payment of the Exercise Price for such shares of Stock indicated by the Participant’s
election.  Payment may be by cash or by check payable to the Company, or except as otherwise provided by the 
Committee before the Option is exercised:  (i) all or a portion of the Exercise Price may be paid by the 
Participant by delivery of shares of Stock (by actual delivery or by attestation) owned by the Participant and
acceptable to the Committee having an aggregate Fair Market Value (valued as of the date of exercise) that is
equal to the amount of cash that would otherwise be required; and (ii) the Participant may pay the Exercise Price 
by authorizing a third party to sell shares of Stock (or a sufficient portion of the shares) acquired upon exercise of
the Option and remit to the Company a sufficient portion of the sale proceeds to pay the entire Exercise Price
and any tax withholding resulting from such exercise.  Except as otherwise provided by the Committee prior to 
exercise, payments made with shares of Stock in accordance with clause (i) above shall be limited to shares held 
by the Participant for not less than six months prior to the payment date.  The Option shall not be exercisable if 
and to the extent the Company determines that such exercise would violate applicable state or Federal securities
laws or the rules and regulations of any securities exchange on which the Stock is traded and shall not be 
exercisable during any blackout period established by the Company from time to time.
         8.        Withholding .  The exercise of the Option is subject to withholding of all applicable taxes.  At the 

election of the Participant, and subject to such rules and limitations as may be established by the Committee from 
time to time, such withholding obligations may be satisfied (i) through cash payment by the Participant; (ii) through 
the surrender of shares of Stock by (actual delivery or by attestation) which the Participant already owns
(provided, however, that to the extent shares described in this clause (ii) are used to satisfy more than the 
minimum statutory withholding obligation, as described below, then, except as otherwise provided by the
Committee, payments made with shares of Stock in accordance with this clause (ii) shall be limited to shares held 
by the Participant for not less than six months prior to the payment date); or (iii) through the surrender of shares 
of Stock to which the Participant is otherwise entitled under the Plan; provided, however, that such shares under
this clause (iii) may be used to satisfy not more than the Company’s minimum statutory withholding obligation
(based on minimum statutory withholding rates for Federal and state tax purposes, including payroll taxes, that
are applicable to such supplemental taxable income).
         9.        Transferability .  The Option is not transferable by the Participant other than by will or by the 

laws of descent and distribution, and during the Participant’s life, may be exercised only by the Participant.  It 
may not be assigned, transferred (except as aforesaid), pledged or hypothecated by the Participant in any way
whether by operation of law or otherwise, and shall not be subject to execution, attachment or similar process.
 Any attempt at assignment, transfer, pledge or hypothecation, or other disposition of this Option contrary to the 
provisions hereof, and the levy of any attachment or similar process upon this Option, shall be null and void and
without effect.
         10.       Definitions .  For purposes of the Option Terms, words and phrases shall be defined as follows: 

                  (a)       Cause .  The term “Cause” means the willful engaging by the Participant in illegal

         conduct or gross misconduct which is demonstrably and materially injurious to the Company.  For 
         purposes of this Option, no act, or failure to act, on the Participant’s part shall be deemed “willful” unless
         done, or omitted to be done, by the Participant not in good faith and without reasonable belief that the
         Participant’s action or omission was in the best interest of the Company.  Notwithstanding the foregoing, 
         the Participant shall not be deemed to have been terminated for Cause unless and until the Company
         delivers to the Participant a copy of a resolution duly adopted by the affirmative vote of not less than
         three-quarters of the entire membership of the Board at a meeting of the Board called and held for such
         purpose (after reasonable notice to the Participant and an opportunity for the Participant, together with
         counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Participant
         was guilty of conduct set forth above and specifying the particulars thereof in detail.
                  (b)       Competitive Business .  The term “Competitive Business” means any business activity in

         which the Company or any Subsidiary is actively engaged at the time the Participant’s employment
         terminates.  For these purposes, entities deemed to be engaged in Competitive Business include, by way 
         of example and
       not limitation, Abraxis BioScience, Inc., Baxter International Inc., Teva Pharmaceuticals, Becton, 
       Dickinson and Company, B. Braun Melsungen AG, Cardinal Healthcare Inc., Fresenius Medical Care
       AG, Terumo Medical Corporation, Patheon, Inc., and Edwards Lifesciences Corporation. 
                (c)       Date of Termination .  The term “Date of Termination” means the first day occurring on

       or after the Grant Date on which the Participant is not employed by the Company or any Subsidiary,
       regardless of the reason for the termination of employment; provided that a termination of employment
       shall not be deemed to occur by reason of a transfer of the Participant between the Company and a
       Subsidiary or between two Subsidiaries; and further provided that the Participant’s employment shall not
       be considered terminated while the Participant is on a leave of absence from the Company or a
       Subsidiary approved by the Participant’s employer.  If, as a result of a sale or other transaction, the 
       Participant’s employer ceases to be a Subsidiary (and the Participant’s employer is or becomes an entity
       that is separate from the Company), and the Participant is not, at the end of the 30-day period following
       the transaction, employed by the Company or an entity that is then a Subsidiary, then the occurrence of
       such transaction shall be treated as the Participant’s Date of Termination caused by the Participant being
       discharged by the employer.
                (d)       Disability .  The Term “Disability” means the Participant’s disability as defined in the

       Hospira Long Term Disability Plan, whether or not such Participant is a participant in such disability plan,
       for a period of twelve (12) consecutive months.
                (e)       Good Reason .  The Term “Good Reason” means any of the following events, absent

       the Participant’s consent: a reduction of the Participant’s base salary; a material diminution in the
       Participant’s authorities, duties, or responsibilities; or a material breach by the Company of any
       agreement between the Company and the Participant.  For each event described above, the Participant 
       must furnish notice to the Board within thirty (30) days of the occurrence of the event, the Company shall
       have thirty (30) days after receiving such notice in which to cure, and if the failure is not cured by the end
       of the cure period the Participant must terminate employment within fifteen (15) days after the expiration
       of the cure period.
                (f)       Retirement .  “Retirement” of the Participant means, the occurrence of the Participant’s

       Date of Termination on or after the date that the Participant reaches the age of 55 and has 10 years of
       combined service with the Company or its subsidiaries (or with Abbott Laboratories and its affiliates,
       provided that the Participant transitioned employment from Abbott to the Company in conjunction with
       the distribution of the Company’s common stock to the Abbott shareholders) (as determined by the
     11.       Heirs and Successors .  The Option Terms shall be binding upon, and inure to the benefit of, the 

Company and its successors and assigns, and upon any person
acquiring, whether by merger, consolidation, purchase of assets or otherwise, all or substantially all of the
Company’s assets and business.
         12.        Administration .  The authority to manage and control the operation and administration of the 

Option Terms shall be vested in the Committee, and the Committee shall have all powers with respect to the
Option Terms as it has with respect to the Plan.  Any interpretation of the Option Terms by the Committee and 
any decision made by it with respect to the Option Terms is final and binding on all persons.
         13.        Plan Governs .  Notwithstanding anything in the Option Terms to the contrary, the Option 

Terms shall be subject to the terms of the Plan, a copy of which may be obtained by the Participant from the
office of the Secretary of the Company; and the Option Terms is subject to all interpretations, amendments,
rules and regulations promulgated by the Committee from time to time pursuant to the Plan. 
         14.        Not An Employment Contract .  The Option will not confer on the Participant any right with 

respect to continuance of employment or other service with the Company or any Subsidiary, nor will it interfere in
any way with any right the Company or any Subsidiary would otherwise have to terminate or modify the terms of
such Participant’s employment or other service at any time.
         15.        Notices .  Any written notices provided for in the Option Terms or the Plan shall be in writing 

and shall be deemed sufficiently given if either hand delivered or if sent by fax or overnight courier, or by postage
paid first class mail.  Notices sent by mail shall be deemed received three business days after mailing but in no 
event later than the date of actual receipt.  Notices shall be directed, if to the Participant, at the Participant’s
address indicated by the Company’s records, or if to the Company, at the Company’s principal executive office.
         16.        Fractional Shares .  In lieu of issuing a fraction of a share upon any exercise of the Option, 

resulting from an adjustment of the Option pursuant to paragraph 3.4 of the Plan or otherwise, the Company will
be entitled to pay to the Participant an amount equal to the fair market value of such fractional share.
         17.        No Rights As Shareholder .  The Participant shall not have any rights of a shareholder with 

respect to the shares subject to the Option, until a stock certificate has been duly issued following exercise of the
Option as provided herein.
         18.        Amendment .  The Option Terms may be amended in accordance with the provisions of the 

Plan, and may otherwise be amended by written agreement of the Participant and the Company without the
consent of any other person.
         IN WITNESS WHEREOF, the Company has caused these presents to be executed in its name and on
its behalf, all as of the Grant Date.
             Hospira, Inc. 



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